The Special Investigating Unit (SIU) has revealed how senior officials at the National Lotteries Commission (NLC) allegedly colluded to launder money through non-profit organisations (NPOs) that had applied for grant funding.

The unit, which on Wednesday appeared before parliament's portfolio committee on trade, industry and competition to give an update on its investigation, said it would probe 50 allegations of irregular allocation of funds by the NLC to unqualified beneficiaries.

SIU head Andy Mothibi said the unit had uncovered a web of corrupt networks between officials and NPOs.

The unit had gathered evidence and was concluding and referring investigations for further action.

“We have observed that there is a high measure of collusion between NLC officials, NPOs and NPCs,” Mothibi said.

The SIU would prepare a report.

During its presentation, the SIU said its investigation into a former board member found that he was a trustee of one of the trusts and a sole director of a group of companies that received NLC grants. He is accused of money laundering.

In one case an NPO was “hijacked” and a R23m grant was paid to it.

“The purpose of the grant was to build an old age home in Mpumalanga. The project was started, but not completed as some of the funds were redirected to individuals connected to the NLC.”

According to the SIU, R5m of the R23m was transferred to an attorney of the group of companies belonging to the former board member for transfer in favour of their client. The board member received R5m.

“In December 2017, the former board member’s family trust paid R565,000 into his private account. In January 2020, a further R300,000 was paid into an unidentified account. The reference for the payment was identified as that of the former board member,” said the SIU.

In 2016 another NPO applied for funding to build a drug rehabilitation centre. The funding was approved and it received R17m. After the signing of the grant agreement between the NPO and the NLC, the NPO appointed a company linked to a senior NLC official to build the centre.

After the NPO received payment of R7.5m, R3.35m was transferred to the construction company. Another R1m was transferred to the former board member's private bank account.

The company appointed by the NPO was owned by the brother of a senior NLC official.

In a similar case, the investigation also revealed that in 2016 an NPC received grant funding of R7.5m from the commission to build a drug rehabilitation centre in Mpumalanga.

In December 2016, the SIU found that the NPC transferred R3.4m into the bank account of the company owned by the brother of the senior official at NLC. A day later, the same company transferred R1m to the former board member’s bank account.

The SIU investigation found that between March and May 2018, R5.4m was paid into the former board member’s bond account. The bond was for his house in Gauteng.

Another board member is alleged to have signed an agreement of sale for a property valued at R27m. He paid R25m into the trust of a conveyancer.

A fifth NPO applied to NLC for funding for the construction of an old age home. Funding amounting to R23m was approved.

The NLC then made a payment of R20m into the NPO’s account. The NPO later transferred R11.7m to a company belonging to one of the key role players, who then transferred R9.3m to the bank account of the second board member’s conveyancer’s account. The money was used to pay a deposit for the house the board member had bought.

He further received R1m from a company of the brother of one of the senior NLC officials. The money was to buy a luxury car for the board member.

“It is clear the company belonging to the brother of one senior official of NLC was used as a vehicle to launder money received by NPOs from NLC,” the SIU said.

The unit said it was acquiring the services of quantity surveyors and engineers to determine funds spent on the unfinished buildings the NPOs constructed with a view to recovering the money the commission lost.

“The SIU has started civil litigation proceedings to preserve illegally gained properties and set aside grants awarded to above mentioned NPOs.”

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